CleanCore Solutions Inc
For the period ended Sep 30, 2024. Filed Nov 13, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 13, 2024
ZONE$3.08-14.9%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-06-10.
0001213900-24-051214
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-13.
0001213900-24-097171
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 86 previous paragraphs and 48 current paragraphs.
23 unchanged; 18 reworded; 7 added; 42 removed; 3 previous and 0 current paragraphs rearranged.
Tables are not compared: 21 previous and 19 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
Depreciation and amortization expense.* *We incurred depreciation and amortization expense of $39,823, or 10.91% of revenue, for the three months ended September 30, 2024, as compared to $38,562, or 11.84% of revenue, for the three months ended September 30, 2023.
Current report
Interest expense, net.* *We incurred interest expense, net, of $39,334, or 10.78% of revenue, for the three months ended September 30, 2024, as compared to $61,142, or 18.77% of revenue, for the three months ended September 30, 2023. The decrease is primarily due to interest expense for the 2024 period being offset by interest income of $17,153 from an interest bearing money market account opened in the fourth quarter of fiscal 2024.
Current report
Net cash used in financing activities was $0 for the three months ended September 30, 2024, as compared to $19,726 for the three months ended September 30, 2023. Net cash used in financing activities for the three months ended September 30, 2023 consisted ofpayments for deferred offering costs of $13,523 and repayment of related party loans of $6,203.
Current report
Debt
Current report
Please see Note 9 to our unaudited condensed financial statements above for a description of the terms of our outstanding debt.
Current report
The preparation of our unaudited condensed financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On a regular basis, we evaluate these estimates. These estimates are based on management’s historical industry experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Current report
For a description of the accounting policies that, in management’s opinion, involve the most significant application of judgment or involve complex estimation and which could, if different judgment or estimates were made, materially affect our reported financial position, results of operations, or cash flows, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Policies” in the Form 10-K.
Removed paragraphs (42)
Previous report
All periods presented on or prior to October 16, 2022 represent the operations of CleanCore Solutions, LLC, or CleanCore LLC, TetraClean Systems, LLC, or TetraClean, and Food Safety Technology L.L.C., or Food Safety, our predecessors companies, and all references to “predecessor” refer to the combined financial position and results of operations of CleanCore, TetraClean and Food Safety on and before such date. References to “successor” refer to the financial position and results of operations of our company subsequent to October 16, 2022.
Previous report
Recent Developments
Previous report
Initial Public Offering
Previous report
On April 25, 2024, we entered into an underwriting agreement with Boustead Securities, LLC, as the representative of the several underwriters named on Schedule 1 thereto, relating to our initial public offering of class B common stock. Under the underwriting agreement, we agreed to sell 1,250,000 shares of class B common stock to the underwriters, at a purchase price per share of $3.72 (the offering price to the public of $4.00 per share of class B common stock minus the underwriters’ discount), and also agreed to grant to the underwriters a 45-day option to purchase up to 187,500 additional shares of class B common stock, at a purchase price of $3.72, pursuant to our registration statement on Form S-1 (File No. 333-274928) under the Securities Act of 1933, as amended, or the Securities Act.
Previous report
On April 30, 2024, the closing of the initial public offering was completed. We sold 1,250,000 shares of class B common stock for total gross proceeds of $5,000,000. After deducting the underwriting commission and expenses, we received net proceeds of approximately $4,239,500.
Previous report
On April 30, 2024, we also issued a class B common stock purchase warrant to the representative for the purchase of 87,500 shares of class B common stock at an exercise price of $5.00, subject to adjustments. The warrant will be exercisable at any time and from time to time, in whole or in part, during the period commencing on April 30, 2024 and ending on April 25, 2029 and may be exercised on a cashless basis under certain circumstances.
Previous report
Conversion of Convertible Notes
Previous report
On May 2, 2024, we issued an aggregate of 257,479 shares of class B common stock upon the conversion of the 10% original issue discount convertible promissory notes issued on January 30, 2024 described below, which included principal of $250,000 and accrued interest of $7,479.
Previous report
Debt Extension and Amendment
Previous report
On April 30, 2024, we and Burlington Capital, LLC, or Burlington, entered into an extension agreement which extended the maturity date of the promissory note issued on October 17, 2022, or the Original Note, described below to May 9, 2024.
Previous report
On May 31, 2024, Burlington and Walker Water LLC, or WW, entered into an allonge, assignment and agreement, or the Assignment Agreement, pursuant to which Burlington agreed to transfer $633,840.00 of the Original Note to WW. The Assignment Agreement also provided that we would make a payment of $900,000 on May 31, 2024 to Burlington to reduce the principal amount of the Original Note.
Previous report
In conjunction with the Assignment Agreement, we issued an amended and restated promissory note to Burlington. The note has a new principal amount of $3,196,881, accrues interest at 8.5% per annum from October 17, 2022 (the date of the Original Note), which shall increase to 10% upon an event of default, and requires quarterly payments in the amount of $100,000 over the course of the next two and a half years, with a final payment of $1,396,881 due on April 1, 2027. The note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type.
Previous report
Pursuant to the Assignment Agreement, we also issued a promissory note to WW in the principal amount of $633,840. The note accrues interest at 8.5% per annum from October 17, 2022 (the date of the Original Note), which shall increase to 10% upon an event of default, and is due on December 31, 2024. The note may be prepaid at any time with no pre-payment penalty and contains customary events of default for a note of this type.
Previous report
Comparison of Three Months Ended March 31, 2024 and 2023
Previous report
Depreciation expense.* *We incurred depreciation expense of $178, or 0.06% of revenue, for the three months ended March 31, 2024, as compared to $0 for the three months ended March 31, 2023.
Previous report
Interest expense.* *We incurred interest expense of $84,093, or 26.79% of revenue, for the three months ended March 31, 2024, as compared to $71,979, or 11.58% of revenue, for the three months ended March 31, 2023.
Previous report
Comparison of Nine Months Ended March 31, 2024 and 2023
Previous report
We believe that reviewing our operating results for the nine months ended March 31, 2023, by combining the results of the successor period (October 17, 2022 to March 31, 2023) and the predecessor period (July 1, 2022 to October 16, 2022) is more useful in discussing our overall operating performance compared to the results of the nine months ended March 31, 2024 (successor). We do not see any potential risks associated with utilizing this combined presentation.
Previous report
Revenue. Our revenue decreased by $1,075,155, or 54.49%, to $898,010 for the nine months ended March 31, 2024 from $1,973,165 for the nine months ended March 31, 2023. The reduced revenue was primarily due to decreases in the volume of products sold to our two largest customers, due to external factors that impacted their number of purchases, offset by increases in product prices. One of our largest historical customers chose to manufacture most of their own units beginning at the start of fiscal year 2023, rather than purchasing our products. The loss of this customer led to a major decline in sales for the nine months ended March 31, 2024. Our second largest historical customer was a larger buying group for several smaller regional groups, and their sales declined because a sales associate at our company, who had a close connection with such buying group, resigned in May 2023. We also experienced a $192,839 decrease in revenue due to our termination of a drop ship arrangement with a third party. Our product price increases occurred in March 2023, and an approximately 20% price increase was applied to all products that we offer due to our market review of competitor pricing. During the nine months ended March 31, 2024, the decrease in revenue was due to an approximate 70% decrease in sales volume, offset by an approximate 15% increase to prices across all product lines.
Previous report
Cost of sales. Our cost of sales decreased by $893,801, or 66.14%, to $457,495 for the nine months ended March 31, 2024 from $1,351,296 for the nine months ended March 31, 2023. As a percentage of revenue, cost of sales decreased from 68.48% for the nine months ended March 31, 2023 to 50.95% for the nine months ended March 31, 2024. This decrease was primarily due to the price increases described above.
Previous report
Gross profit. As a result of the foregoing, our gross profit decreased by $181,354, or 29.16%, to $440,515 for the nine months ended March 31, 2024 from $621,869 for the nine months ended March 31, 2023. As a percentage of revenue, gross profit increased from 31.52% for the nine months ended March 31, 2023 to 49.05% for the nine months ended March 31, 2024.
Previous report
General and administrative expenses.* *Our general and administrative expenses decreased by $3,721,623, or 71.73%, to $1,466,594 for the nine months ended March 31, 2024 from $5,188,217 for the nine months ended March 31, 2023. As a percentage of revenue, our general and administrative expenses decreased from 262.94% for the nine months ended March 31, 2023 to 163.32% for the nine months ended March 31, 2024. Such decrease was primarily due to a reduction in stock option expense.
Previous report
Advertising expenses.* *Our advertising expenses increased by $25,756, or 147.73%, to $43,191 for the nine months ended March 31, 2024 from $17,435 for the nine months ended March 31, 2023. Such increase was primarily due to an increase in trade show sponsorship expenses.
Previous report
Depreciation expense.* *We incurred depreciation expense of $388, or 0.04% of revenue, for the nine months ended March 31, 2024, as compared to $6,143, or 0.31% of revenue, for the nine months ended March 31, 2023.
Previous report
Interest expense. We incurred interest expense of $233,105, or 25.96% of revenue, for the nine months ended March 31, 2024, as compared to $239,231, or 12.12% of revenue, for the nine months ended March 31, 2023.
Previous report
Our company was formed in August 2022 and completed the acquisition in October 2022. Since the acquisition, we have invested in further developing our products, hiring key personnel, and engaging third party experts such as accountants and underwriters in connection with our initial public offering described above.
Previous report
Net cash provided by financing activities was $150,556 for the nine months ended March 31, 2024, as compared to $2,608,761 for the nine months ended March 31, 2023. Net cash provided by financing activities for the nine months ended March 31, 2024 consisted of proceeds from the issuance of convertible notes of $225,000 and proceeds from related party loans of $50,014, offset by payments for deferred offering costs of $124,458, while net cash provided by financing activities for the nine months ended March 31, 2023 consisted of proceeds from the issuance of class B common stock of $1,650,000, proceeds from the issuance of series seed preferred stock of $1,000,000, proceeds from related party loans of $399,483 and proceeds from the issuance of class A common stock of $100, offset by repayments of loans due to related parties of $288,861, payments for deferred offering costs of $150,683 and repayments of long term debt of $1,278.
Previous report
Private Placement
Previous report
Between October 14, 2022 and November 29, 2022, we issued an aggregate of 660,921 shares of class B common stock for total gross proceeds of $1,150,000 and net proceeds of approximately $1,035,000 in a private placement transaction.
Previous report
Promissory Note
Previous report
On October 17, 2022, we issued a promissory note in the principal amount of $3,000,000 to Burlington, which was amended pursuant to extension agreements on September 13, 2023 and December 17, 2023. The note bears interest at a rate of 7% per annum; provided that such interest rate increased to 10% per annum on September 13, 2023. The note is due on the earlier of (a) the closing of a firm commitment initial public offering and concurrent listing on a national securities exchange or (b) April 4, 2024. We may prepay the note at any time at any time without penalty. The note is unsecured and contains customary events of default. As of March 31, 2024, the outstanding principal balance of this note is $3,000,000 and it has accrued interest of $355,726.
Previous report
Convertible Promissory Notes
Previous report
On January 30, 2024, we issued three 10% original issue discount convertible promissory notes to three separate accredited investors in the principal amounts of $27,778, $111,111, and $111,111. The purchase prices of the notes were $25,000, $100,000 and $100,000, respectively. These notes accrue with simple interest on the outstanding principal amount at the rate of 12% per annum and the interest shall commence on the date of issuance and continue to accrue until paid in full or until the note is converted. The principal amounts and all accrued and unpaid interest automatically convert into class B common stock upon the closing of our initial public offering. Unless earlier converted into class B common stock, all unpaid interest and principal is due and payable on December 31, 2024, which date may be extended at the election of us by up to two additional 90-day periods. As of March 31, 2024, the outstanding principal balance of these notes is $250,000 and they have accrued interest of $4,545.
Previous report
Related Party Demand Notes
Previous report
On October 4, 2022, we issued a promissory note to each of Matthew Atkinson, our Chief Executive Officer at such time, and Clayton Adams, our President at such time and current significant stockholder, in the principal amount of $104,450 each for a total of $208,900. These notes bear interest at a rate of 5% per annum beginning on the 30th day after issuance and are due on the 60th day following written demand from the holder. As of March 31, 2024, the outstanding principal balance of these notes is $208,900 and they have accrued interest of $15,567.
Previous report
Related Party Revolving Loan
Previous report
On March 26, 2024, we entered into a loan agreement with Clayton Adams, a significant stockholder, pursuant to which we issued a revolving credit note to Mr. Adams in the principal amount of up to $500,000. Pursuant to the loan agreement and note, Mr. Adams agreed to provide advances to us upon request during the period commencing on the effective date of the registration statement relating to our initial public offering (April 25, 2024) and continuing until the second anniversary of such date, which is referred to as the maturity date. This note accrues simple interest on the outstanding principal amount at the rate of 8% per annum, with all principal and interest due on the maturity date; provided that upon an event of default (as defined in the note), such rate shall increase to 13%. We may prepay the note at any time without penalty or premium. The note is unsecured and contains customary events of default for a loan of this type. As of March 31, 2024, no advances have been made and the principal amount of this note is $0.
Previous report
The following discussion relates to critical accounting policies for our company. The preparation of financial statements in conformity with United States generally accepted accounting principles, or U.S. GAAP, requires our management to make assumptions, estimates and judgments that affect the amounts reported, including the notes thereto, and related disclosures of commitments and contingencies, if any. We have identified certain accounting policies that are significant to the preparation of our financial statements. These accounting policies are important for an understanding of our financial condition and results of operation. Critical accounting policies are those that are most important to the portrayal of our financial condition and results of operations and require management’s difficult, subjective, or complex judgment, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and may change in subsequent periods. Certain accounting estimates are particularly sensitive because of their significance to financial statements and because of the possibility that future events affecting the estimate may differ significantly from management’s current judgments. We believe the following critical accounting policies involve the most significant estimates and judgments used in the preparation of our financial statements:
Previous report
Revenue Recognition. We generate revenue from sales of our products and recognize revenue as control of our products is transferred to our customers, which is generally at the time of shipment based on the contractual terms with our customers. We provide customer programs and incentive offerings, including growth incentives and volume-based incentives. These customer programs and incentives are considered variable consideration. We include in revenue variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the variable consideration is resolved. This determination is made based upon known customer program and incentive offerings at the time of sale, and expected sales volume forecasts as it relates to our volume-based incentives. This determination is updated every reporting period. For the periods ended March 31, 2024 and 2023, customer growth and volume-based incentives were minimal. Certain product sales include a 2-year manufacturer’s warranty that provides the customer with assurance that the product performs as intended. Such warranties are assurance-type warranties and are accounted for as contingencies under ASC 460-10.
Previous report
Impairment of Long-Lived Assets. Long-lived assets consist primarily of property and equipment and intangible assets. Long-lived assets are tested for impairment when events and circumstances indicate the assets might be impaired by first comparing the estimated future undiscounted cash flows of the asset or asset group to the carrying value. If the carrying value exceeds the estimated future undiscounted cash flows, an impairment loss is recognized based on the amount that the carrying value exceeds the fair value of the asset or asset group. We did not recognize impairment losses during the periods ended March 31, 2024 and 2023.
Showing the first 40 of 42 passages. Open the source sections for the rest.
Reworded paragraphs (18)
Previous wording
In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” included in our Prospectus, dated April 25, 2024 and filed with the Securities and Exchange Commission, or the SEC, on April 30, 2024, and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
Current wording
In some cases, you can identify forward-looking statements by terms such as “may,” “could,” “will,” “should,” “would,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “project” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions. You should not place undue reliance on forward-looking statements because they involve known and unknown risks, uncertainties and other factors, which are, in some cases, beyond our control and which could materially affect results. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under Item 1A “Risk Factors” included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, or the Form 10-K, and elsewhere in this report. If one or more of these risks or uncertainties occur, or if our underlying assumptions prove to be incorrect, actual events or results may vary significantly from those implied or projected by the forward-looking statements. No forward-looking statement is a guarantee of future performance.
Previous wording
We specialize in the development and manufacturing of cleaning products that produce pure aqueous ozone for professional, industrial, or home use. We have a patented nanobubble technology using aqueous ozone that we believe is highly effective in cleaning, sanitizing, and deodorizing surfaces and high-touch areas.
Current wording
We specialize in the development and production of cleaning products that produce pure aqueous ozone for professional, industrial, or home use. We have a patented nanobubble technology using aqueous ozone that we believe is highly effective in cleaning, sanitizing, and deodorizing surfaces and high-touch areas.
Previous wording
Our mission is to become a leader in creating safe, clean spaces that are free from any chemical residue or skin irritants. We are currently expanding our distributor network, improving our manufacturing processes, and proving the effectiveness of our products in restaurants, airports, and hotels.
Current wording
Our mission is to become a leader in creating safe, clean spaces that are free from any chemical residue or skin irritants. We are currently expanding our distributor network, improving our production processes, and proving the effectiveness of our products in restaurants, airports, and hotels.
Previous wording
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
Current wording
In addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. In other words, an emerging growth company can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting standards.
Previous wording
The following table sets forth key components of our results of operations for the three months ended March 31, 2024 and 2023, both in dollars and as a percentage of our revenues.
Current wording
The following table sets forth key components of our results of operations for the three months ended September 30, 2024 and 2023, both in dollars and as a percentage of our revenue.
Previous wording
Revenue. We generate revenue from sales of our cleaning products. Our revenue decreased by $307,486, or 49.48%, to $313,920 for the three months ended March 31, 2024 from $621,406 for the three months ended March 31, 2023. The decrease is primarily due to a large one time order of $393,229 in March 2023 that was not repeated this year.
Current wording
Revenue. We generate revenue from sales of our cleaning products. Our revenue increased by $39,216, or 12.04%, to $364,900 for the three months ended September 30, 2024 from $325,684 for the three months ended September 30, 2023. The increase is primarily due to an increased number of customers.
Previous wording
Cost of sales. Our cost of sales consists of raw materials, components and labor. Our cost of sales decreased by $195,344, or 53.01%, to $173,184 for the three months ended March 31, 2024 from $368,528 for the three months ended March 31, 2023. As a percentage of revenue, cost of sales decreased from 59.31% for the three months ended March 31, 2023 to 55.17% for the three months ended March 31, 2024. This improvement is due to increased pricing the company implemented in May 2023.
Current wording
Cost of sales. Our cost of sales consists of raw materials, components and labor. Our cost of sales increased by $26,826, or 17.58%, to $179,401 for the three months ended September 30, 2024 from $152,575 for the three months ended September 30, 2023. As a percentage of revenue, cost of sales increased from 46.85% for the three months ended September 30, 2023 to 49.16% for the three months ended September 30, 2024. This increase was primarily due to an increase in sales and increase in demo expenses due to a change in sales strategy of providing customers considering large orders demonstration equipment at no cost.
Previous wording
Gross profit. As a result of the foregoing, our gross profit decreased by $112,142, or 44.35%, to $140,736 for the three months ended March 31, 2024 from $252,878 for the three months ended March 31, 2023. As a percentage of revenue, gross profit increased from 40.69% for the three months ended March 31, 2023 to 44.83% for the three months ended March 31, 2024.
Current wording
Gross profit. As a result of the foregoing, our gross profit increased by $12,390, or 7.16%, to $185,499 for the three months ended September 30, 2024 from $173,109 for the three months ended September 30, 2023. As a percentage of revenue, gross profit decreased from 53.15% for the three months ended September 30, 2023 to 50.84% for the three months ended September 30, 2024.
Previous wording
General and administrative expenses.* *Our general and administrative expenses consist primarily of personnel expenses, including employee salaries and bonuses plus related payroll taxes, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our general and administrative expenses increased by $56,952, or 11.33%, to $559,398 for the three months ended March 31, 2024 from $502,446 for the three months ended March 31, 2023. As a percentage of revenue, our general and administrative expenses increased from 80.86% for the three months ended March 31, 2023 to 178.20% for the three months ended March 31, 2024. Such increase was primarily due increased internal payroll related to new positions added to facilitate future growth.
Current wording
General and administrative expenses.* *Our general and administrative expenses consist primarily of personnel expenses, including employee salaries and bonuses plus related payroll taxes, stock based compensation expense, professional advisor fees, bad debts, rent expense, insurance and other expenses incurred in connection with general operations. Our general and administrative expenses increased by $406,338, or 79.69%, to $916,214 for the three months ended September 30, 2024 from $509,876 for the three months ended September 30, 2023. As a percentage of revenue, our general and administrative expenses increased from 156.25% for the three months ended September 30, 2023 to 251.09% for the three months ended September 30, 2024. This increase was primarily due to $118,440 stock related compensation expense, $106,720 external accounting fees, $74,600 in consulting fees and $69,200 increase in director and officer insurance.
Previous wording
Advertising expenses.* *Our advertising expenses consist of vendor trade shows and various trade publications. Our advertising expenses increased by $15,527, or 702.58%, to $17,737 for the three months ended March 31, 2024 from $2,210 for the three months ended March 31, 2023. Such increase was primarily due to an increase in trade show sponsorship expenses.
Current wording
Advertising expenses.* *Our advertising expenses consist of vendor trade shows and various trade publications. Our advertising expenses increased by $45,387, or 5,514.82%, to $46,210 for the three months ended September 30, 2024 from $823 for the three months ended September 30, 2023. As a percentage of revenue, our advertising expenses increased from 0.25% for the three months ended September 30, 2023 to 12.66% for the three months ended September 30, 2024. Such increase was primarily due to a significant increase in our public relations activities.
Previous wording
Net loss.* *As a result of the cumulative effect of the factors described above, we had a net loss of $520,670 for the three months ended March 31, 2024, as compared to $323,757 for the three months ended March 31, 2023, an increase of $196,913, or 60.82%.
Current wording
Net loss.* *As a result of the cumulative effect of the factors described above, we had a net loss of $856,082 for the three months ended September 30, 2024, as compared to $437,294 for the three months ended September 30, 2023, an increase in loss of $418,788, or 95.77%.
Previous wording
Our company has incurred losses and negative cash flows from operations. To date, we have financed our operations primarily through revenue generated from operations, third party borrowings, private placements of our securities and advances from our founders. As of March 31, 2024, we had cash of $56,082, a net loss for the nine-month period ended of $1,302,763 and cash used in operating activities of $485,530.
Current wording
Our company has incurred losses and negative cash flows from operations. From October 17, 2022 (the date of the acquisition) through September 30, 2024, we have financed our operations primarily through private investor funding and an initial public offering. As of September 30, 2024, we had cash and cash equivalents of $1,210,382, a net loss for the three months ended September 30, 2024 of $856,082 and cash used in operating activities of $799,764.
Previous wording
Despite the initial public offering, management believes that currently available resources will not be sufficient to fund our planned expenditures over the next 12 months. These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the date of issuance of the accompanying unaudited condensed financial statements.
Current wording
Despite our initial public offering, management believes that currently available resources will not be sufficient to fund our planned expenditures over the next 12 months. These factors, individually and collectively indicate that a material uncertainty exists that raises substantial doubt about our company’s ability to continue as a going concern for 12 months from the date of issuance of the accompanying financial statements.
Previous wording
We will be dependent upon the raising of additional capital through equity and/or debt financing in order to implement our business plan and generate sufficient revenue in excess of costs. If we raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock. If we raise additional funds by issuing debt, we may be subject to limitations on its operations, through debt covenants or other restrictions. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our financial condition. Thes accompanying unaudited condensed financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.
Current wording
We will be dependent upon the raising of additional capital through equity and/or debt financing in order to implement our business plan and generate sufficient revenue in excess of costs. If we raise additional capital through the issuance of equity securities or securities convertible into equity, stockholders will experience dilution, and such securities may have rights, preferences or privileges senior to those of the holders of common stock. If we raise additional funds by issuing debt, we may be subject to limitations on its operations, through debt covenants or other restrictions. There is no assurance that we will be successful with future financing ventures, and the inability to secure such financing may have a material adverse effect on our financial condition. Thes accompanying financial statements do not include any adjustments to the amounts and classifications of assets and liabilities that might be necessary should we be unable to continue as a going concern.
Previous wording
The accompanying unaudited condensed financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business.
Current wording
The accompanying financial statements have been prepared on a going concern basis under which our company is expected to be able to realize its assets and satisfy its liabilities in the normal course of business.
Previous wording
Net cash used in operating activities was $485,530 for the nine months ended March 31, 2024, as compared to $286,318 for the nine months ended March 31, 2023. For the nine months ended March 31, 2024, our net loss of $1,302,763 and an increase in inventory of $103,569, offset by an increase in accounts payable and accrued liabilities of $386,279, a non-cash interest expense of $223,783, stock-based compensation of $151,981, and depreciation and amortization of $115,885, were the primary drivers of net cash used in operating activities. For the nine months ended March 31, 2023, our net loss of $4,829,157 and a decrease in accounts receivable of $354,176, offset by stock-based compensation of $3,997,442 and an increase in accounts payable and accrued liabilities of $313,174, were the primary drivers of the net cash used in operating activities.
Current wording
Net cash used in operating activities was $799,764 for the three months ended September 30, 2024, as compared to $308,335 for the three months ended September 30, 2023. For the three months ended September 30, 2024, our net loss of $856,082 and a decrease in prepaid expenses of $142,084, offset by an increase in non-cash stock based compensation expense of $182,400, were the primary drivers of net cash used in operating activities. For the three months ended September 30, 2023, our net loss of $437,294, a decrease in accounts payable and accrued liabilities of $144,224, a decrease in inventory of $77,026, and a decrease in accounts receivable of $66,233, offset by a non-cash interest expense of $208,248, an increase in prepaid expenses of $93,550 and stock based compensation of $63,960, were the primary drivers of the net cash used in operating activities.
Previous wording
Net cash used in investing activities was $2,138 for the nine months ended March 31, 2024, as compared to $2,007,882 for the nine months ended March 31, 2023. The net cash used in investing activities for the nine months ended March 31, 2024 consisted entirely of purchases of property and equipment. Net cash used in investing activities for the nine months ended March 31, 2023 consisted of cash used in connection with the acquisition of the assets of CleanCore LLC, TetraClean and Food Safety of $2,000,000 and purchases of property and equipment of $7,882.
Current wording
Net cash used in investing activities was $6,465 for the three months ended September 30, 2024, as compared to $1,015 for the nine months ended September 30, 2023. The net cash used in investing activities for both periods consisted entirely of purchases of property and equipment.
Previous wording
Our principal commitments consist mostly of obligations under the loans described above. Other than indicated above, at March 31, 2024, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.
Current wording
Our principal commitments consist mostly of obligations under the loans described in Note 9 to our unaudited condensed financial statements above. We also have a non-cancellable operating lease commitment for our office facility expiring in 2028 as described in Note 13 to the unaudited condensed financial statements above. Other than the foregoing, at September 30, 2024, we did not have other long-term debt obligations, capital (finance) lease obligations, operating lease obligations, purchase obligations or other long-term liabilities reflected on our statements of financial position.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
The following table sets forth key components of our results of operations for the period from July 1, 2022 to October 16, 2022 (Predecessor), from October 17, 2022 to March 31, 2024 (Successor), and for the nine months ended March 31, 2024 (Successor).
Previous report — wording carried elsewhere
Following are the combined results for the nine months ended March 31, 2024 and 2023, both in dollars and as a percentage of our revenues.
Previous report — wording carried elsewhere
Net loss.* *As a result of the cumulative effect of the factors described above, we had a net loss of $1,302,763 for the nine months ended March 31, 2024, as compared to $4,829,157 for the nine months ended March 31, 2023, a decrease of $3,526,394, or 73.02%.